Certain amendments to the Romanian Fiscal Code enter into force in 2017.
Corporate income tax in Romania
The application of tax exemption on reinvested profits has been extended for an indefinite period of time (according to previous provisions, this incentive would have ceased with effect from 31 December 2016). In addition, taxpayers will now also be able to benefit from said tax incentive during the acquisition of software rights.
Starting January 2017, corporate income tax exemption has been introduced for taxpayers that exclusively perform innovation, research and development activities. This exemption will apply during the first 10 years of activity of newly established companies, respectively for the following 10 years for already incorporated taxpayers.
VAT in Romania
The standard rate of VAT is reduced from 20% to 19%.
Starting January 2017, the obligation of taxpayers who perform intra-community transactions to register in the Register of Intracommunity Operators has been repealed.
Tax on income derived by microenterprises
The income threshold beneath which a legal person is required to apply the microenterprises tax regime has been increased from EUR 100,000 to EUR 500,000 (the equivalent in RON). The other conditions for application of the microenterprises tax regime remain unchanged.
Any Romanian legal entity (either newly incorporated or existing microenterprise) which has a share capital of at least RON 45,000 may opt to become a corporate income tax payer (previously, only newly established companies with a share capital of at least EUR 25,000 were allowed to exercise this option).
Social contributions in Romania
Starting 1 January 2017, a 5.5% health insurance contribution will be due on investment income (capital gains, interest, dividends); however, the taxable basis is capped at five average gross salaries. This contribution will be due in addition to the already applicable 5% personal income tax, unless the income recipient earns income in the form of salaries, pensions, freelancing activities etc.
For salary income earned as from February 2017, the cap of gross average salaries, which served as calculation basis for the monthly pension contribution (due by both employer and employees) and for the monthly health insurance contribution (due by employees), has been removed.
Elimination of the tax on special constructions
The tax on special constructions (1% for constructions other than buildings) is eliminated as of 1 January 2017.
TPA offers an overview of the most important tax innovations in the following CEE and SEE countries in which we operate: Austria, Albania, Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania, Serbia, Slovakia and Slovenia. Investing in CEE/SEE 2017